AXA Equitable Holdings, Inc. (NYSE:EQH) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 08:00 am ET


AXA Equitable Holdings, Inc. (NYSE:EQH) Q3 2019 Earnings Conference Call - Final Transcript


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Ladies, and gentlemen, thank you for standing by and welcome to the AXA Equitable Holdings', Third Quarter Earnings Call. [Operator Instructions]. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Jessica Baehr, Head of Investor Relations. Thank you. Please go ahead, ma'am.

Jessica Baehr

Thank you. Good morning and welcome to AXA Equitable Holdings' third quarter 2019 earnings call. Materials for today's call can be found on our website at Before we begin, I would like to note that some of the information we present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure.

Our results may materially differ from those expressed in or indicated by such forward-looking statements. So I'd like to point out the Safe Harbor language on Slide 2 of our presentation. You can also find our Safe Harbor language in our 10-Q. Joining me on today's call is Mark Pearson, President and Chief Executive Officer of AXA Equitable Holdings; and Anders Malmstrom, our Chief Financial Officer. Also on the line is John Weisenseel, AllianceBernstein's Chief Financial Officer.

During this call, we will be discussing certain financial measures that are not based on Generally Accepted Accounting Principles, also known as non-GAAP measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures and related definitions may be found on the Investor Relations portion of our website, in our earnings release, slide presentation and financial supplement.

I would like now to turn the call over to Mark and Anders for their prepared remarks.

Mark Pearson

Thank you, Jessica, and good morning everyone. Thank you for joining the call today. I'd like to begin by sharing four key highlights for the quarter. Firstly, third quarter non-GAAP operating earnings was strong, helped by strong flows and positive equity markets.

Our target to deliver $160 million annualized benefit from the realized rebalancing of our general account has been achieved one year ahead of schedule. The quarter also saw record sales in our structured annuity product, SCS. Overall, new sales across our insurance segment were up 7% year-over-year with over 85% of sales from our life subsidiary, coming from products like SCS without interest rate guarantees.

Obviously, interest rates dominate the macroeconomic picture. The ten-year treasury was down 100 basis points through the first nine months of the year, including a 30 basis point decline in the third quarter. We have completed our annual actuarial assumption review. We're taking a prudent approach to strengthen our US GAAP accounting reserves principally on our legacy VA portfolio to reflect changes in policyholder utilization, which should be magnified by low interest rates.

However, the way in which we manage the business is not to US GAAP, but to our fully mark to market economic framework where economic liabilities are higher than US GAAP reserves. We believe that our economic framework best protect shareholders and best reflects the performance of the business. This is most evident in our